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Reserve Capital Partners' Purchase of Danari Office Park Reflective of Impact North Texas' Density is Having on Investments

Dallas-based Reserve Capital Partners' latest deal to land in the last six months - the acquisition of Danari Office Park - fits squarely into the private equity firm's investment strategy and illustrates the impact North Texas' densification is having on real estate investments.

Reserve Capital partnered with Southlake, TX-based Trinity Private Equity Group to acquire the three-building, 111,286-square-foot office complex, located at Preston and Belt Line roads in North Dallas, for an undisclosed sum. The park last sold at $10.5 million in 2007. It was last valued by county appraisers at about $8 million.

"We like to target value-add opportunities in irreplaceable locations," Brant Landry, a partner at Reserve Capital, told CoStar News. "This is a strategic play for us that has been, so far, serving us well."

To date, Reserve Capital has deployed $60 million of its $300 million fund acquiring properties, including Hidden Grove at Park Central in North Dallas. The firm has an $80 million property under contract in San Antonio with hopes of investing in more Texas markets.

"The building in San Antonio matches the profile we are looking for in a property with a similar size to Danari Office Park in a similar-type location," Landry added. "There is nothing broken about it; it's a great building, but it needs another long-term owner and a little TLC."

Ron Hebert, a first vice president of investments for Marcus & Millichap's Dallas office, said he is seeing an increased investor interest in well-located properties as Dallas-Fort Worth continues to sprawl with the influx of new residents.

"Traffic is getting worse and people want to live closer to work," Hebert told CoStar News. "If they want a 30-minute commute, it's no longer 15 miles, but 10 miles away. Everything is becoming denser, which is helping the investment value of existing buildings."

Reserve Capital Partners plans to upgrade the park with improvements to the common spaces and tenant amenities, and rebrand the park as Preston Grove. The firm has hired Dallas-based Holt Lunsford Commercial to lease and manage the office buildings.

Meanwhile, Reserve Capital Partners is seeking more deals with plans to fully deploy its $300 million value-add real estate fund by mid-2019. The team is underwriting a handful of properties in Dallas-Fort Worth right now, Landry said.

Upon deploying the entire fund, the Reserve Capital team plans to raise a second real estate fund.

"Our average deal size is $20 million to $25 million," Landry said. "We'd like them to be larger, but they have to be the right deal."

Reserve Capital Partners’ newest acquisition is an office property on a corner “surrounded by decision makers.”

The Dallas real estate equity fund announced this week it purchased Denari Office Park, made up of three buildings at 15150, 6009 and 6029 Preston Road, for an undisclosed price. The 111,286-square-foot complex is 70 percent leased with 20 tenants.

“The building appeals to a smaller tenant market,” said Greg Seitz, a partner with Reserve. “The reason we like the location is the surrounding demographic of decision makers around the building, and that’s who’s historically been in the building.”

The transaction is Reserve’s third in the last six months. It also owns Hidden Grove, a Dallas office park with tenants like Pollo Campero and Studio Movie Grill, as well as the GE Transportation Building in Melbourne, Florida.

Reserve is rebranding its newest holding as Preston Grove, and has hired Holt Lunsford to help lease the property’s remaining space, catering to small businesses and medical offices.

“We should offer a good value attraction for the location and B-plus offices in that location,” added Clint Riley, a partner with Reserve.

Southlake’s Trinity Private Equity Group partnered with Reserve to acquire the property and worked with the firm to purchase Hidden Grove. Ron Hebert, first vice president of investment with Marcus & Millichap represented the owner in the Preston Grove transaction.

According to some predictions, Dallas is the most likely candidate for Amazon's breathlessly anticipated HQ2. About 50,000 jobs, an 8M SF campus and the sheer brand might of Amazon are bound to shake things up if Dallas does win the bid, but is it enough to take this city to the big leagues?

Though Dallas is enjoying a long and profitable upcycle in almost every asset class, there are a few things holding us back from making it to the upper echelon of top-tier cities like San Francisco or New York City — things even Amazon cannot deliver.

Putting aside industrial, which is a national top-tier market and enjoys a lot of attention from investors both foreign and domestic, market experts say Dallas is still in the process of maturing, and institutional capital has been avoiding large-scale moves in the market.

Landry says RCP plans to close on Danari Office Park at Preston and Beltline this month.

DALLAS—Reserve Capital Partners is a recently launched Dallas-based commercial real estate investment firm which was also instrumental in the launch of E. Smith Realty, now ESRP, four years ago. The firm has properties pending in Dallas.

In this exclusive, partner Brant Landry recently discussed the vision for the year, the firm’s funding and various market trends apparent in DFW.

GlobeSt.com: What is your vision for 2018?

Landry: Our vision is to acquire an additional $200 to $250 million in assets in 2018, either through office or industrial asset classes.

GlobeSt.com: Please explain the Reserve Capital Fund 1.

Landry: Reserve Capital Partners Fund 1 is a fully subscribed real estate private equity fund based out of Dallas. Fund 1 will have a total portfolio size of approximately $300 million in total assets once the fund is fully deployed. Reserve Capital Partners Fund 1 was co-founded by myself, Clint Riley and Greg Seitz. The three of us have a minimum of 20 years of real estate experience each and combined experience of 75 years of real estate experience.

GlobeSt.com: What other projects is Reserve Capital Partners working on?

Landry: We have quite a few projects in the works right now that will be enormous assets to Reserve Capital Partners. We just issued an $87 million offer on another office asset. We also plan on closing on Danari Office Park at the northeast corner of Preston and Beltline this month.

GlobeSt.com: What market trends do you see for 2018?

Landry: 2018 will be an exciting year for the real estate market. I see continued job growth, rent growth and new development, but also sticker shock for companies that have leases expiring. We believe there will be a flight to value in some cases.

GlobeSt.com: How can a company evolve and grow throughout various trends?

Landry: A company can evolve and grow throughout trends by focusing on fundamentally sound real estate. Do not try to time the market or overpay just for the sake of acquiring assets.

GlobeSt.com: How do you anticipate these trends affecting business?

Landry: Profits are up and companies are investing heavily in their facilities. Higher rents and class-A properties are not impacting companies absorbing that type of space. However, more conservative companies will be watching the correction in the economy closely and create a more defensive position as it relates to occupying real estate. Class B-plus or A-minus assets will be the only asset classes that will offer rent structures that will resemble what companies experienced 7 to 10 years ago. I believe that some companies will move to a class-B property to protect bottom-line earnings.

GlobeSt.com: Are there any trends you see from 2017 continuing into 2018?

Landry: I think we will see more of the same–job growth, strong demand, delivery of supply and some rent growth. I think with rising interest rates, development will slow down.

MELBOURNE, FLA. — NorthMarq Capital has arranged the $25 million sale of a 191,500-square-foot office building located at 1990 NASA Blvd. in Melbourne. The building is home to General Electric Co. Dallas-based Reserve Cap Partners acquired the asset from an undisclosed seller, and Will James of NorthMarq brokered the sale. In addition, NorthMarq arranged a 10-year, CMBS acquisition loan on behalf of Reserve Cap Partners.

Dallas based local real estate equity fund makes their second acquisition in 60 days. More on the way.

Reserve Capital Partners announced today that they have acquired The GE Transportation Building building located at 1990 West NASA Boulevard, Melbourne, Florida. Reserve Capital Management will take over property management of the building. GE Transportation just commenced a new 10 year lease and has occupied the building since 2007.

The debt was brokered by Will James at NorthMarq Capital. Mesirow Financial out of Chicago partnered with Reserve Capital to acquire the asset. David Bailey at Stan Johnson Company represented the seller, TIC Properties Management, LLC.

Reserve Capital Partners (RCP) is a Dallas based real estate private equity fund. RCP was founded by real estate veterans, Greg Seitz, Brant Landry and Clint Riley. Reserve Capital Fund I is acquiring up to $300 million in real estate assets. The asset classes are office, industrial and self storage.

A Dallas property investment fund has made its first acquisition with the purchase of a North Dallas office campus.

Reserve Capital Partners just acquired the Hidden Grove office campus at 12404 Park Central Drive near Forest Lane. Reserve Capital bought the property from Red River Asset Management, which had owned the buildings for four years.